U.S. President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran's nuclear program. The renewed sanctions would likely dampen Iranian oil exports, disrupting global oil supply.

"That's an issue that is more political in nature that could have a shock in the market," said Mark Watkins, a regional investment manager at U.S. Bank Wealth Management in Park City, Utah.

"It's one of those wildcards that's out there because if the sanctions do happen, there's going to be oil that comes off the market."

Brent has risen by around 6.5 percent this month. The gains came despite a higher dollar, which hit its strongest since Jan. 11 against a basket of currencies.

A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies.

Concerns about market tightness have also been fueled by the deteriorating political and economic situation in Venezuela that has led to a 40 percent decline in crude output in the past two years.

Price increases have been capped by rising U.S. production as shale drillers ramp up activity, underpinning a widening discount between Brent and WTI. U.S. crude's discount to Brent hit its widest since Dec. 28 at $6.74 a barrel.

Surging U.S. production, which rose to 10.59 million barrels per day last week, has encouraged record-high U.S. exports.

U.S. drillers added five oil rigs this week, bringing the total count to 825, the highest level since March 2015, General Electric's Baker Hughes energy services firm said.

But while U.S. producers are accelerating shale drilling in areas in the United States, higher production has not necessarily translated into stronger refining results for some oil companies.